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FTX Co-Founder Arrested in Bahamas – Accused of Fraud By SEC

Sam Bankman Fried (also known as SBF) has recently been accused by the SEC of conducting fraud against his investors during a multi-year period. The Securities and Exchange Commission went further to say that the reason SBF conducted this scheme was to support the lavish lifestyle he and his friends have been living.

Trouble in Paradise

The Co-founder of the now hated digital asset exchange companies was arrested in the Bahamas last week. Authorities found him in his luxury penthouse shortly after U.S. prosecutors filed a criminal indictment for SBF.

It was only matter a of time before he was arrested, as authorities have been suspecting SBF regarding the misuse of client funds. Bankman Fried will be arraigned in the Bahamas in the coming days. Once federal prosecutors uncover their charges against the hated co-founder, his extradition process back to the United States will begin.

SEC Civil Complaint

According to the civil complaint that was filed by the SEC last week, SBF redirected multi billion dollars in customer funds in order to support the growth of his other business ventures. The main regulator on Wall Street also accused FTX of raising $1.8 billion in an “Orchestrated scheme to defraud equity investors”.

“We allege that Sam Bankman-Fried built a house of cards on a foundation of deception while telling investors that it was one of the safest buildings in crypto,” SEC Chair Gary Gensler said in a statement.

Misleading Investors

According to the SEC, Bankman Fried would tell his investors that FTX had complex risk controls and that all their assets would remain safe. Despite telling this to his investors, SBF was putting their money towards the funding of Alameda Research, which is a company also co-founded by Bankman Fried.

Claims made by the SEC go on to say that from the very beginning, SBF was diverting these customer assets to his other company to make several undisclosed purchases. These purchases range from political donations to the purchases of lavish properties.

FTX Related Entities

In early November, nearly 100 entities that have ties with FTX filed for bankruptcy protections in the United States. Questions are being raised regarding the other founders involved with FTX, Almeda, and other related entities. Although right now it is only speculation, many people believe that the reason criminal charges are solely being put on SBF is due to the law enforcement cooperation of the other people involved.

Wrap Up

SBF is being held at the Cable Beach Police Station in the Bahamas. The House Finance Committee has also scheduled a hearing regarding the demise of FTX. Following the arrest of Bankman-Fried, chairwoman of the House Finance Committee Maxime Waters said that is important for the American public to understand what was going on regarding FTX.

 
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